U.S. Airlines Becoming Less Worldly

July 31, 2014

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During second-quarter earnings calls last week, Delta Air Lines, American Airlines Group and United Continental Holdings each guided to lower international capacity plans for the upcoming winter schedule (about October to March).

Current scheduling data for U.S. carriers indicate 2.6% year-over-year industry capacity growth for the third quarter, roughly in line with the second-quarter growth rate (up 2.3%). Third-quarter domestic capacity growth remains constrained at below 2% year-over-year, while international capacity growth for U.S. carriers is tracking up 4.2% year over year. Looking further ahead, fourth-quarter scheduled capacity growth is tracking up 4.3% year-over-year (up 3% domestic, up 7% international). Scheduled domestic capacity for the fourth quarter remained flat versus last week, while international capacity declined from up 7.2% two weeks ago to up 6.6% year-over-year in this week's tape. Lastly, global capacity to Venezuela (across all carriers) is tracking down 22% year-over-year in the fourth quarter.

American reduced third-quarter pro forma capacity 0.2 percentage point to up 2.1% year-over-year driven by the following adjustments to September: cancellation of second daily Friday/Saturday Charlotte-Frankfurt frequencies, cancellation of the second daily Dallas-Narita Thursday trip, subtraction of one daily JFK-San Juan flight and reduction from four times to three times per day Miami-Sao Paulo flights.

Delta reduced third-quarter capacity by 0.1 percentage point up 3.3% year-over-year by reducing one daily Atlanta-Mexico City trip in September in addition to day-of-week cuts within Atlanta-San Juan, Cancun, Montego Bay, and Sao Paolo markets. Carrier-specific changes to fourth-quarter capacity plans versus last week.

American reduced fourth-quarter pro forma capacity by 0.1 percentage point to up 3.1% year-over-year on a combination of factors: specific day-of-week reductions on various Pacific routes (e.g. Chicago-Shanghai from two times daily to 1.7 times per day in the fourth quarter), reduced weekly frequencies on Miami-Sao Paulo and a handful of domestic adjustments (subtracting two daily LGA-Philadelphia, subtracting four times per week LAX-Reno).

Delta increased fourth-quarter capacity 0.1 percentage point to up 7.1% year-over-year primarily as a result of upgauging various markets within the network. The top five markets by increases in seats week-over-week are Atlanta-Las Vegas, Detroit-Las Vegas, JFK-Salt Lake City, LAX-Salt Lake City, and Atlanta-LaGuardia (top five account for over half of all domestic seat increases versus last week).

Spirit Airlines (
SAVE
) increased fourth-quarter capacity 0.3 percentage points to up 17.4% year-over-year as a result of adding new Chicago-Baltimore service that starts mid-November.

-- Duane Pfennigwerth -- Jeffrey Eisenberg

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